Thursday, 17 August 2017

The obvious continues to elude them

The stated aim of the UK Government in publishing ‘position papers’ in relation to Brexit is to start providing some clarity about what the UK actually wants.  On the basis of what they’ve come up with so far, it appears that they’re really no clearer now than they were 14 months ago.
Amongst their proposals to date are:
·       There should be a customs union which mirrors the existing one in all important respects except that the UK uniquely should be free to negotiate different trading arrangements with non-EU countries than those negotiated by the EU itself, because ‘obviously’ a country with a market of 60 million and no trade negotiators will get better deals than a market of 450 million with a host of experienced negotiators.
·       There should be something called ‘regulatory equivalence’ under which the UK basically mirrors all the EU regulations except that it also retains the right to vary them as and when it chooses.
·       There should be completely frictionless trade between the EU and the UK except that the UK should have the right to opt out of all the mechanisms and costs involved in managing that trade.
It amounts to little more than an elaboration of what we already knew – the UK still expects both to have its cake and eat it, and any attempt by the EU27 to prevent that will be portrayed as a deliberately punitive response.  The Brexiteers continue to believe in the fantasy that ‘they need us more than we need them’.
Yesterday, we had the latest thinking (although that may be too grand a word) on the question of the border between the UK and the Republic of Ireland.  According to the Northern Ireland Secretary, the proposal is entirely reasonable and should be accepted because of the trade involved on all sides.  This seems to be repeating the same mistake that the UK Government has made from the outset – they have a deeply ingrained mindset that tells them that trade is the only factor to be considered.  Once again, they show themselves incapable of understanding that for all the other EU countries there are a range of other factors to be considered – it isn’t only about trade and economics.  It’s a transactional approach to international relationships which fails to grasp the wider motivations.
One essential element of the proposals on Ireland appears to be a heavy dependence on IT as a way of managing and controlling border crossings.  The UK Government – of all colours and over many decades – has an appalling record on delivery when it comes to large new complex IT systems.  They almost never come in on time or budget (and closer examination of those that do claim to have met the time and budget would almost certainly reveal that it’s often a result of ‘descoping’ – delivering a lesser system than that original envisaged).  That in itself doesn’t augur well; but in this case, they’re talking about delivering a complex system the scope of which has not yet been defined, let alone agreed, within a fixed and immutable timescale.  Still, it will generate some good revenues and profits for one or two large IT companies, whose directors are likely to be laughing all the way to the bank.
There is, though, a cheap and easy way to maintain frictionless trade with the EU27, to maintain regulatory equivalence, to retain a customs union, and to avoid a hard border across Ireland.  I wonder how more position papers need to be ridiculed before they work out what that might be…

Wednesday, 16 August 2017

What's the question?

Someone once said that if the answer is ‘more politicians’, then the question must be a very strange one indeed.  A similar feeling struck me over the past few days as I read about the speculation over the next Tory leader and Prime Minister.  If Jacob Rees-Mogg is the answer, then what on earth is the question?

Tuesday, 15 August 2017

A price worth paying?

Many years ago, I remember one independentista telling me that he would be willing to eat grass if that were to be the cost of Wales becoming independent.  It’s rather a fundamentalist position, and not one that I share.  And it’s certainly not a case that I’d ever be willing to put before the people of Wales in an attempt to persuade them to support independence.  There is a price to independence of course – just as there is a price to not choosing independence.  And much as I might wish it were otherwise, neither of those prices can ever be fully known in advance; there is an element of faith on both sides.  Both sides can produce their own numbers ‘proving’ the truth of their prior beliefs, but neither can ever actually be certain that they are right.
That underlines the point that there is a more general truth underlying that grass-eating argument; most of us are willing, in principle, to pay a price of some sort for something which we believe to be of greater overall good than mere material wealth.  For example, I don’t doubt that democracy costs more than dictatorship, and can often be more decisive, but few of us would actually choose to live in a dictatorship purely for a small reduction in taxes.  In principle, that idea that some freedoms are worth having even if they come at a price is an entirely reasonable and honourable political position to take.  The extent to which others can be persuaded to support it will depend on how much they value those freedoms and how large the price is, and both of those factors are legitimate issues of political debate.
I detect an increasing tendency amongst those who led us down the Brexit path to adopt a similar position, arguing in effect that freedom from what they portray as ‘interference’ from ‘Brussels’ is of value in its own right, even if it involves taking an economic hit in the process.  It’s certainly more honest than their previous position of arguing that we were all going to be better off, despite all the evidence to the contrary.  The problem is, though, that it’s being honest after the event.  It also omits spelling out that those taking that hit will not be themselves, but the rest of us.  Honesty now is not enough to make up for previous dishonesty, and the ‘people have spoken’ mantra is a wholly inadequate defence.

Tuesday, 8 August 2017

Big lies and bigger lies

There has been widespread coverage today of the release by the UK Treasury of its estimate of the amount of money “sent to Brussels” each week (£156 million), and the comparison between that and the headline figure on the side of that infamous bus, which was £350 million.  The i newspaper has an opinion piece by John Redwood in which he makes a number of points in response.  He glosses over the figure by saying that everyone was aware “that a large sum of money was at stake”, and that “the two sides disagreed about just how large a sum it was”.  Well, yes, they did indeed disagree about the sum involved, but I’m not at all sure that the fact that the £350 million was an outright and blatant can be glossed over by calling it ‘a disagreement about the figure’.

Anyway, he (like others) makes the point that the real issue was that “taking back control of our money”, and “being able to spend our money on our own priorities” were key issues for the Leave campaign.  And in a related story the Director of Get Britain Out makes the rather fluffy point that even £150million per week “is clearly still at too much” without advancing much by way of argument to explain why, or how much exactly would have been acceptable.  The problem with all of this is that the assumption is being generally made that, after Brexit, the UK will be free to spend this money – whatever the actual figure – on things like the NHS and social care.  Put in simplistic terms – give the money to Brussels, or spend it on the NHS – the attraction to many is obvious. 

It’s not an honest choice, however, unless we first consider what else we lose by not paying that money ‘to Brussels’ – because it isn’t simply some sort of membership fee which simply disappears into the so-called bureaucracy in the UE.  Firstly, the UK will need to replicate all the bodies which we currently share with the other members of the EU on a collective basis; and the cost per head is likely to be higher for unique UK institutions than it is for shared agencies.  Then there are little matters such as payments to farmers, and regional aid, the continuation of which the UK has conspicuously declined to guarantee.  Rather than 'NHS vs Brussels', a more honest choice would be NHS vs Regional aid and farming subsidies.  Perhaps people would still choose cuts to both of those in preference to EU membership, but at the moment the reality of the choice that they think they've made isn’t even being made clear to them.

And, in reality, that’s no surprise.  People like Redwood and Farage never suddenly developed a deep commitment to paying for the NHS and social care; they merely latched on to an argument that they thought – rightly so as turned out – would persuade people to vote for something which would otherwise be seen to be against their own best interests.  And that’s the real issue about the infamous £350 million for the NHS.  It’s not just that the sum was a complete lie, it’s also that the whole line of argument was a lie.  The choice was never a real one, just a ploy to achieve the aim of Brexit. 

Monday, 7 August 2017

Coming back to bite them

One of the problems with simplistic political slogans is that turning them into reality never quite matches the image that those targeted by the slogans took them to mean in the first place.  One obvious example, in relation to Brexit, was “control of our borders”.  It is increasingly obvious that what many of those demanding this outcome meant was control of other people coming into the UK; they certainly didn’t intend it to be reciprocal.  Hence the outrage being increasingly expressed by the tabloids about delays to holidaymakers entering other countries.

People who have, for years, demanded a tightening of border controls are now complaining bitterly about the delays which result from more stringent checks of passports and other entry documents.  But what does "controlling the borders” mean if not paying more attention to who is entering a country and whether they are who they claim to be?  It could be, of course, that what they really intended was for more people to be employed to man the borders.  Perhaps it was all a giant job creation scheme for the border agency.  That might be a bit more credible if the same tabloids hadn’t also spent years complaining about the ‘bloated public sector’.

Personally, I suspect that it is related to the long-standing tradition of British exceptionalism.  It’s not ‘freedom of movement’ that they want to stop, it’s other people’s - foreigners’ – freedom of movement.  The traditional blue British passport which they think they’re going to be getting back always asserted, as I recall, the demand of ‘Her Britannic Majesty’ that the holder should be allowed through without let or hindrance.  For some strange reason, however, those strange foreigners don’t see things in the same way – they actually have the nerve to think that UK subjects should be treated the same way as everyone else.  Inevitably, this clear and logical outcome of Brexit will be portrayed as yet another example of Brussels punishing the UK.  Of course.

Friday, 4 August 2017

Baldrick and the cunning plan

Could it really be, as some in Brussels are starting to suspect, that the UK’s apparently shambolic approach to Brexit is all a bluff, part of a cunning plan to lull the EU27 into a false sense of security?  Under this interpretation, it’s not that they don’t have a strategy at all; it’s more that their strategy is one of pretending not to have a strategy so that they can brilliantly blindside everyone in a few months’ time.
I can see why the rest of the EU might fear that this might be the case.  And I can see why many in the UK might be hoping it’s the case – it’s far better to believe that than to believe that the government really is completely clueless.  But such an analysis goes against a variant of Occam’s razor.  When in doubt, the simplest and most obvious explanation (in this case, total cluelessness) is generally to be preferred.
And as we learned from that master of philosophy and deception, Baldrick, cunning can sometimes be a euphemism for extremely stupid.

Wednesday, 2 August 2017

All models are wrong - and some aren't even useful

On Monday, the Tory group leader in the Assembly demanded that the First Minister dissociate himself from Corbyn’s policies, claiming that they would result in around £4,000 of extra debt for each person in Wales, and that the UK would end up paying around £5.8 billion a year in additional interest payments if Labour’s plans were implemented.  It’s the stuff of good political knock-about, but without a lot more information on how they’ve done their sums (and the Tories don’t exactly have a brilliant record when it comes to financial arithmetic), it’s difficult to know what, if any, relationship exists between his figures and ‘truth’, in the mathematical sense of the word.
But, for the sake of argument, let’s suppose his figures are accurate ones.  Is it really the economic disaster as which he paints it?  Of course, £5.8 billion sounds like a very large sum of money to be paying in extra interest every year, but that’s in absolute terms.  And it makes a number of unstated but implicit assumptions.
The first comparison that has to be made is not, as the Tories effectively claimed, with the status quo, but with what the outcome would be over the same period with a Tory Government.  The implicit assumption in what Davies said is that Tory spending plans would not lead to a similar outcome, but given the way in which out-turn has varied from predictions over the last few years, and the way in which much of the (uncosted) Tory manifesto has been ditched, that looks to me like an invalid assumption.  If there is a gap between the likely outcome under a Corbyn government and the likely outcome under a Tory government (and even that is a significant ‘if’) then it is probable that the gap would be much smaller than Davies is suggesting.  All the signs are that the Tories will also increase borrowing to pay for their programme; the honest question is not how much Labour would need to borrow, but what is the difference in borrowing levels between the two.
The second question is about what proportion of GDP the debt would represent, and what proportion of expenditure any extra interest payments would represent.  Both of those are dependent on a range of assumptions and guesses about the likely level of inflation, economic growth, and interest rates.  Given the propensity of all involved to get such estimates wrong, it would be a very brave person who would claim to know the correct value of any of those variables over a five-year parliament.  But in principle, simple mathematics shows that a debt which increases in absolute value by a smaller percentage than the rate of economic growth will end up reducing the ratio of debt to GDP, which is why the absolute value being used by Davies is irrelevant.  The same mathematics also demonstrates that when interest rates are lower than the rate of inflation, paying more interest in absolute terms can still result in a reduction in the percentage of government income committed to paying interest.
What we do know is that, as things stand today (and I accept that’s a very important caveat), the UK Government is effectively borrowing money interest-free.  It’s costing us, in real terms, absolutely nothing, and given the demand from people who want to lend money to the government, there is no immediate problem in borrowing more.  Indeed, some would even argue that increasing government spending actually generates more tax income than the amount spent: the calculation all depends on the value assigned to the infamous ‘multiplier’.
Now of course it is true that different economists will give different answers to questions such as these, but that merely serves to underline that economists base their predictions on models rather than on absolute truths, and there are a number of different models available.  As the famous statistician, George Box, said, “All models are wrong, but some are useful”.  It’s a point worth bearing in mind that when politicians state categorically what the outcome of a particular policy will be for the economy they are depending on a model of some sort, whether they admit it - or even realise it - or not.
As I said at the beginning, this sort of guff from Davies is all good knock-about politics, but it’s really froth; he has no more clue than do I about the accuracy of what he says.  The real question is why one particular model – the idea that the government is like a giant household, which is used by the Tories when they come out with this stuff – is taken as gospel truth by a media which regularly demands that politicians from other parties explain themselves in the terms mandated by that model.  It would be more useful to political debate – let alone to economic policy – if the idea which underlies much of what they say was challenged more forensically rather than being simply accepted.  And it’s a shame that more opposition politicians don’t appear to have the understanding or the confidence to do that.

Tuesday, 1 August 2017

Agreeing to disagree

The increasingly public disagreements within the UK cabinet would be funny if the issue weren’t so serious.  Their attempts to claim that they’re saying the same thing when they are very obviously saying something very different are stretching the meaning of language considerably.  Agreeing that ‘freedom of movement’ ends in 2019 because the EU rule no longer applies, but then arguing that ending compliance with the rule does not mean that people will no longer be free to move for some years to come is a distortion worthy of Orwell.  And even that distortion isn’t acceptable to the Foxes of this world.
It isn’t only the Tories who are struggling, though.  When John McConnell claimed last week that Jeremy Corbyn and Carwyn Jones ‘are on the same page’, I surely wasn’t the only one left asking myself whether they were indeed looking at the same page number, but in completely different books.  In a similar attempt at distorting language, it seems that the claim is based on them wanting the same thing – the ‘exact same’ benefits of membership of the single market.  It’s just that half of them believe that they can have that without being a member of the single market whilst the other half have at least a nodding acquaintance with Planet Earth.
The denied divisions are having a serious impact on both parties.  On the government side the paralysis caused by infighting and a lame duck Prime Minister is increasingly hampering the government’s ability to do anything very much; and on the opposition side, some are even starting to talk about splitting the party over the issue. 
Margaret Thatcher once famously said that her greatest achievement was New Labour; that she had, in effect, provoked a change as a result of which the party became little more than a clone of the Conservative Party.  She didn’t do a lot for the Tories, though.  She left them as she found them – bitterly divided over Europe.  It’s a division which has haunted her successors.  The Cameron-May legacy doesn’t look to have done anything other than made that problem worse, although perhaps they too will look to what they’ve achieved for Labour instead.  Infecting that party with the same toxic virus over Europe as their own party has suffered for many years is an achievement, of sorts, I suppose.

Friday, 28 July 2017

The problems are all somebody else's

Amongst the many problems which the Brexiteers never really thought through is the question of the arrangements for the border between the UK and the Irish republic.  If the UK were willing to consider remaining in the single market and customs union, then the problem would be greatly diminished, but given the outright refusal of both the government and most of the main opposition party even to consider such an option, the issue could end up becoming one of the major obstacles to progress.
Initially, some in the UK Government seemed to be suggesting that the Irish Republic could carry out UK border checks in its ports and airports, seemingly insensitive to the way in which treating the Republic as being somehow ‘part of the UK’ for customs purposes would be received by an independent state.  Subsequently the UK Government has suggested some sort of ‘hi-tech’ land border across Ireland, a suggestion which has not gone down well in Dublin, which sees any reintroduction of a land border as being in danger of re-opening past divisions and damaging both parts of the island.  Their response has been to propose that the Irish Sea should become the border.
Unsurprisingly, the idea of imposing customs and passport checks between one part of the UK and another (effectively treating the north as part of the Republic for customs purposes) has not gone down terribly well with the DUP in the north of Ireland.  One of their responses has been to suggest that there are only two options – there will either be a hard land border, or the Republic will have to follow the UK out of the EU.  As an exercise in cold logic, it’s hard to fault that, although as an understanding of political reality it fails miserably, and would lead inexorably to the imposition of a hard border. 
But it also underscores the underlying attitude of many Brexiteers from the outset on two points in particular.  The first is that Brexit only ever made any sense at all as a precursor to breaking up the EU, and the second is that the problems caused by Brexit are somebody else’s – in this case, the Republic of Ireland.  It’s another example of the UK’s sense of entitlement and exceptionalism that the problems should all be resolved by others bending down before the might of Britannia.  

Thursday, 27 July 2017

Laying the blame in the right place

In his latest remarks on immigration, Jeremy Corbyn seems to be moving his party further and further towards the position and rhetoric used by UKIP.  Worse still, he seems to be as determined as UKIP to blame the immigrants and/or the European Union for the failings of UK Government and UK legislators.
He’s actually right in drawing attention to one of the problems, which is unscrupulous employers and agencies bringing in workers from other EU countries – primarily Eastern Europe – and paying them very low wages, sometimes even below the national minimum wage.  One of the ways that they get away with this apparent breach of UK law is by providing transport and accommodation and then deducting those costs from the pay of the workers concerned.  The question, though, is who is to blame for this?
Reading Corbyn’s comments, one might reasonably conclude that it is a consequence of the ‘freedom of movement’ within the EU, and that Brexit would therefore enable a UK Government to put a stop to the practice.  However, the real problem here isn’t with the EU at all – it’s with the inadequacy of UK legislation covering agency workers, and with unscrupulous employers taking advantage of that inadequacy.  It doesn’t require Brexit to end this exploitation; it merely requires a UK Government with the political will.  On that score, the workers concerned have been badly let down by successive UK Governments, Tory and Labour alike.  And their failure to act is one of the misdirected reasons for an increase in resentment about foreign workers in the UK.
Perhaps if Corbyn gets the chance, post-Brexit, he might lead a government committed to taking action against this form of exploitation.  But for the long term, it’s more likely that legislation will be shaped by the Tories than by Labour.  And they’ve already made it clear that their preference is for less control over the way businesses employ people not more.  Deliberate obfuscation over the cause of the problem could end up making things worse, not better.